America's richest banker quadrupled his firm's assets last year by making a massive bet that inflation would spike

• Andy Beal is America's wealthiest banker, with a net worth of $10.3 billion.
• His firm's assets shot up from $7.5 billion to $32.6 billion after making a big get on inflation, MarketWatch reported.
• Beal didn't follow the pack of other regional lenders desperately looking to generate yield.

While many of America's regional banks were making risky investments to generate yield during a prolonged period of low interest rates, Andy Beal, the founder and chairman of Beal Bank, was on the sidelines waiting to capitalize on a trade that would ultimately quadruple his firm's assets in a year.

According to MarketWatch, Beal Bank's assets shot up from $7.5 billion in late 2021 to $32.6 billion by the end of 2022 after making a bet timing inflation's sudden spike.

Beal Bank bought up $21.2 billion of Treasury bonds, MarketWatch wrote citing sources familiar and filings with the Federal Deposit Insurance Corporation. The vast majority of the purchases were Treasury inflation-protected securities (TIPS) with durations of up to three years. These products are used to offset the effects of inflation by adjusting the value of the principal amount based on consumer prices.

Beal funded the purchases with lower yielding certificates of deposit, the report says, and then hedged with derivatives and swaps contracts to lock in lower costs for the bank.

As a result, Beal Bank's net income rose from $600 million to $1.48 billion over the course of a year. Beal, the sole owner of the bank, has a net worth of $10.3 billion, according to Forbes.

Beal didn't follow the pack of other banks who were trying desperately to generate yield in a time of record-low interest rates.

Silicon Valley Bank, now infamously, loaded up on long-dated mortgage bonds with low-fixed yields and other long-term debt without properly managing risk and accounting for rising interest rates. The losses it took on its bond portfolio as prices plunged ultimately sowed panic about its liquidity position, resulting in a run on customer deposits and the downfall of the tech lender entirely.

It isn't the first time Beal Bank has deftly navigated a volatile market. The bank went mostly dormant before the Great Financial Crisis and its aftermath, returning to the market after the historic crash to purchase distressed assets for a steep discount.